[ad#post_ad]The Chevrolet Volt is a heroic and landmark vehicle, and a grand achievement by General Motors. We here have been following the car’s development since its inception as a concept, and along the way have often wished GM would plan to sell many hundreds of thousands of them. The more Volts on the road, the less oil used.
Of course GM shouldn’t build more cars than can be sold, and more importantly for the newly profitable company, they shouldn’t build cars they cannot make money on.
According to multiple GM executives there is little or no profit being made on each Volt built at a present cost of around $40,000. Furthermore, the $700 million of development that went into the car has to be recouped.
GM does have a plan to make the Volt business case profitable, according to vehicle line executive Doug Parks. “In reality, it won’t be profitable at the beginning,” said Parks about the Volt.
The plan to profitability is to reduce cost on a yearly basis as opposed to waiting the full development cycle to a second generation, typically 5 or 6 years for most cars. “It is our hope, every year as we have opportunity to improve the performance and even take cost out, that at the end of the first lifecycle we make money,” he said.
Parks also disclosed GM is trying to improve efficiency with each yearly iteration too, but that itself wont help bring down costs, except if less lithium ion cells are needed to achieve the same range. “We’re developing technology that can lead to minor increases in performance but a big cost reduction,” he said.
“No big changes to range and/or performance, just ongoing tweaks and refinements in many different areas, including battery,” Parks told GM-Volt. “We will have a strong focus to improve costs, but will make sure we at least maintain performance – or even improve it slightly if possible.”
Parks also reported that the entire 2011 build inventory has already been sold out. Those units, he said, “are gone.”
Despite this high demand and low volume, GM has no immediate production modifications. “There’s really no plan to change that slow ramp-up through next year,” he says. “Then, when we really open it up in ’12, we’ll build our planned volume and see what the market says. If we want to do a lot more, we’ll look at it.”
Source (Wards Auto)
Hat tip to JeremyK.
This entry was posted on Thursday, December 2nd, 2010 at 6:50 am and is filed under Financial, Next Generation. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.